Dragged down by weak heavy industry and an ailing state-owned sector, industrial profitability in China fell last year to its lowest level since 2003 while persistent overcapacity is likely to perpetuate downward pressures on profit margins, a new study has found.
Louis Kuijs, head of Asia economics at research firm Oxford Economics, found that the average profit margin among some 328,000 firms in China’s official industrial survey – which includes all state-owned enterprises and those non state-owned firms that post annual sales in excess of Rmb20m – fell to 5.8 per cent in 2015, down from a recent high of 7.6 per cent in 2010 (see chart).
However, this headline number concealed a broad divergence. State-owned companies are likely to have registered a continuation last year of the weakening returns on assets they have suffered since 2010, while non state companiesappear to have held up better (see chart), Mr Kuijs said.
The divergence was partly down to the fact that hard-hit sectors such as mining, steel, other metals and chemicals – all of which were affected by a softening real estate market - hold a high concentration of state enterprises, owned both by the central and local-level governments.
Within such capital intensive sectors, some distress was pronounced. Steel companies, for instance, posted an average profit margin of 0.8 per cent last year, down from a recent high of 3.9 per cent in 2010. Chemical companies’ average profit margin last year was 5.3 per cent, down from 7.7 per cent in 2010, and “other metals” profit margins were 2.7 per cent, down from 5.6 per cent in 2010 (see chart).
Looking forward, the pain was likely to continue, Mr Kuijs predicted. “Employment has already been cut significantly in the badly hit sectors. Nonetheless, due to still high investment levels, capacity expansion in industry remains too fast, depressing the profit outlook.”
Overall, in the two years to the end of 2015, some 3.9m jobs were lost from industry, including 873,000 shed in coal mining and 533,000 in steel.
But the problem is that although such cuts are significant, the overcapacity overhang remains greater. The European Chamber of Commerce in China recently published estimates of capacity utilisation rates for steel, aluminium, cement, refining, flat glass and paper industries as being between 65 and 85 per cent. In all cases, utilisation rates slumped since 2008, according to the Chamber’s estimates.
Take steel as an example. The official plan is to cut between 100m-150m tons of capacity over the next five years. But this huge number only accounts for 10 to 15 per cent of current overall capacity, meaning that more will probably remain to be cut after - and if - this five-year target is achieved.
研究公司牛津经济研究院(Oxford Economics)的亚洲经济负责人高路易(Louis Kuijs)发现，中国官方工业调查的约32.8万家公司——包括所有国企以及年销售额超过2000万人民币的非国有企业——的平均利润率，从近年高点——2010年的7.6%下滑至2015年的5.8%（见图）。
但问题在于，虽然减员数量巨大，产能过剩的情况依然突出。中国欧盟商会(European Chamber of Commerce in China)最近发布了一份评估报告，认为中国钢铁、铝、水泥、炼油、平板玻璃及造纸等行业的产能利用率在65%至85%之间。该商会估计，自2008年以来，所有这些行业的产能利用率都出现了大幅下滑。